Singapore’s economic outlook to remain weak for coming months

Growth outlook for Singapore’s economy will continue to be weak for the coming six to nine months, noted DBS Bank. According to the advance GDP estimates, Singaporean economic growth was flat in the first quarter of 2016. On a quarterly seasonally-adjusted annualized basis, the headline growth was flat, as compared with Q4 2015’s strong growth of 6.2%. On an annual basis, the economy expanded 1.8%.

The manufacturing sector shrank 2% y/y; however, it grew sharply by 18.2% on quarterly saar basis in spite of the drop in non-oil domestic exports, PMIs and industrial output. The growth in manufacturing sector is likely to be revised down, according to DBS Bank. The manufacturing sector’s outlook continues to be weighed down by the decline in non-oil domestic shipment to China.

Meanwhile, the services sector is losing momentum. The sector has contracted after expanding for a few quarters. On an annual basis, the services sector growth slowed to 1.9% from 2.8%, whereas on a quarterly basis, the sector shrank 3.8% after growing solidly by 7.7% previously. For three consecutive months, loan growth continued to be at multi-year low of -1.2%, indicating weakness in financial services.

“Our GDP growth forecast for the full year remains at of 1.5%, which essentially implies at least one quarter of contraction. In fact, we maintain the view that risk of a technical recession should not be discounted”, added DBS Bank.